ELEMENTOS LIMITED — Regulatory Filings 2009

Dec 21, 2009

Option Deed

$\widetilde{\Sigma}$

à.

Elementos Limited

Neil Francis Stuart

Level 2 / 307 Queen Street, GPO Box 142, Brisbane Q 4001 Phone: 07 3002 8700, Fax: 07 3221 3068 Email: mail@hemhart.com.au, Web: www.hemhart.com.au

1.		Definitions and Interpretation	1
	1.1	Definitions	1
	1.2	Interpretation	$\overline{2}$
2.	Conditions
	2.1	Conditions precedent to this Deed	3
	2.2	Effect of non-fulfilment	3
3.		Grant of Options	3
4.		Nature Of Options	3
	4.1	Entitlement to Shares	3
	4.2	Options Not Transferable	3
	4.3	No Quotation	3
	4.4	ASX Escrow	3
5.		Exercise Price	4
6.	Right to Exercise
	6.1	Exercise	4
	6.2	Exercise Period	4
	6.3	Termination of Employment	$\overline{4}$
	6.4	Forfeiture without right to exercise	4
7.	Manner of Exercise
	7.1	Exercise Procedure	5
	7.2	Payment	5
8.		Allotment and Issue of Shares on Exercise of Options
	8.1	Allotment and Issue of Shares	5
	8.2	Quotation of Shares	5
	8.3	Rights attaching to Shares	5
	8.4	Death or Bankruptcy of the Option Holder	6
9.		Reorganisations of Capital	6
	9.1	Overriding Principle	$\boldsymbol{6}$
	9.2	Consolidation	6
	9.3	Sub-division	6

TABLE OF CONTENTS

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$\sim 100$

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	Reduction of capital by return of capital 9.4
	9.5	Reduction of capital by a cancellation of capital	$\overline{7}$
	9.6	Pro rata cancellation of capital	$\overline{7}$
	9.7	Pro Rata Issues	$\overline{7}$
	9.8	Bonus Issues	7
10.		Participation in New Issues	7
	10.1	Limited Right to Participate upon Exercise of Options	$\overline{7}$
	10.2	Notice	8
11.		Listing Rules and Approvals	8
	11.1	Changes in Capital	8
	11.2	Shareholder Approval	8
12.	Changes to Terms of Options
13.	Warranties		8
	13.1	The Company	8
	13.2	Option Holder	8
14.	General		$\mathbf{9}$
	14.1	Notices	9
	14.2	Counterparts	9
	14.3	Costs	9
	14.4	Waiver	9
	14.5	Further Assurance	10
	14.6	Severability	10
	14.7	Entire Understanding	10
	14.8	Governing Law	10
	14.9	Assignment	10
	SCHEDULE 1		11
		SCHEDULE 2 - OPTION EXERCISE NOTICE	12

$\langle \cdot, \cdot \rangle$

$\sim 10^{-1}$

Elementos Limited ACN 138 468 756 of Level 1, Level 1, 349 Parties Coronation Drive, Milton, Queensland 4064.

(Company)

Neil Francis Stuart or his nominee of 55 Samarai Street, Moggill Qld 4070.

(Option Holder)

Background

• А. The Company resolved to grant and issue options to its Directors on 23 October 2009.
• В. This Deed sets out the terms and conditions under which the Company grants and the Option Holders and Directors accept the Options the subject of the Company's resolution on 23 October 2009.

DEED

$\mathbf{1}$ Definitions and Interpretation

$1.1$ Definitions

In this document:

ASTC means the ASX Settlement and Transfer Corporation Pty Limited ABN 49 008 504 532.

ASTC Settlement Rules means the operating rules of the settlement facility provided by ASTC.

ASX means ASX Limited ACN 008 624 691.

Director means a director of the Company.

Dispose includes to sell, transfer, assign, encumber or to novate.

Exercise Notice means a notice substantially in the form set out in Schedule 2.

Exercise Period means the period between the date of grant of the Options and the Expiry Date.

Exercise Price means \$0.25, unless amended in accordance with clauses 9 or 11.1.

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Expiry Date means and includes 20 October 2015.

Listing Rules means the Listing Rules of ASX.

Options means the options specified in Schedule 1.

Share means a fully paid ordinary share in the capital of the Company.

Vesting Conditions means the conditions specified in Schedule 1 which must be satisfied in respect of an Option before it can be exercised.

Vesting Date means the date on which the Vesting Condition relating to an Option is satisfied.

$1.2$ Interpretation

Unless expressed to the contrary:

• $(a)$ headings and boldings are for convenience only and do not affect the interpretation of this document;
• $(b)$ this document is not to be interpreted against the interests of a party merely because that party proposed this document or some provision in it or because that party relies on a provision of this document to protect itself;
• $(c)$ where an expression is defined anywhere in this document another part of speech or grammatical form of that expression has a corresponding meaning:
• $(d)$ a reference to:
• $(i)$ an individual or person includes a firm, corporation, incorporated association, and government or statutory body or authority:
• $(ii)$ the word 'include' or 'including' is to be construed without limitation, whether or not "without limitation" is used;
• $(iii)$ any gender includes all genders;
• $(iv)$ the singular includes the plural and vice versa;
• $(v)$ recitals, clauses, Schedules or annexures are to recitals, clauses, Schedules or annexures of or to this document;
• $(v_i)$ a statute, ordinance or other law includes regulations and other statutory instruments made under it and consolidations, amendments and re-enactments of it;
• $(vii)$ money is to Australian currency;
• $(viii)$ this document or another document includes the document as varied or replaced; and

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any party to this document, or any other document or $(ix)$ arrangement includes that party's executors, Liquidators, substitutes, successors and permitted assigns.

$2.$ Conditions

$2.1$ Conditions precedent to this Deed

This Deed is conditional upon the Company being admitted to the Official List of and the Company's Shares are quoted on ASX on or before the first occurring Vesting Date.

$2.2$ Effect of non-fulfilment

If the Conditions are not fulfilled in accordance with clause 2.1, this Deed will be at an end as to its future operation.

$3.$ Grant of Options

The Company:

• Grants the Options to the Option Holder; and $(a)$
• $(b)$ Will deliver to the Option Holder a certificate evidencing the issue to the Option Holder of the Options that includes a notation to the effect that the Options are issued on and subject to the terms of this Deed.

$\overline{\mathbf{4}}$ . Nature Of Options

$4.1$ Entitlement to Shares

Each Option entitles the Option Holder to subscribe for one Share in the Company during the Exercise Period, subject to satisfaction of the Vesting Conditions and payment of the Exercise Price in accordance with this Deed.

$4.2$ Options Not Transferable

Subject to the Company's Constitution, the Corporations Act, the Listing Rules and the ASTC Settlement Rules, the Options will not be transferable and cannot be Disposed of by the Option Holder.

$4.3$ No Quotation

The Options will not be quoted on ASX.

$4.4$ ASX Escrow

Despite anything in this Deed, the Options and any dealings in them or Disposals of them will be subject to any restrictions that ASX may impose pursuant to ASX Listing Rule 9.

$5.$ Exercise Price

The amount payable on exercise of an Option, is the Exercise Price.

$6.$ Right to Exercise

$6.1$ Exercise

If during the Exercise Period, the Vesting Conditions for Options are satisfied, all or some of the Options in respect of which the Vesting Conditions have been satisfied, may be exercised by the Option Holder in accordance with clause 7.

6.2 Exercise Period

An Option may only be exercised during the Exercise Period. The Options will lapse if the relevant Vesting Conditions are not satisfied by the Expiry Date or having been satisfied before the Expiry Date, the Options are not exercised in accordance with clause 7 by the Expiry Date.

$6.3$ Termination of Employment

Upon the occurrence of:

• $(a)$ The termination of the employment of the Option Holder, if employed by the Company or if the Option Holder is not a natural person, the employment by the Company of the Director at whose request the Option Holder was registered as holder of the Options; or
• $(b)$ If the Option holder or if the Option holder is not a natural person, the Director at whose request the Option Holder was registered as holder of the Options, ceases for any reason to be a Director of the Company,

the Option Holder will have the shorter of 6 months or until the Expiry Date to exercise any Options in respect of which the Vesting Conditions are satisfied during that period, following which period any unexercised Options will lapse without liability to the Company.

$6.4$ Forfeiture without right to exercise

If the Option Holder ceases to hold office as a Director of the Company during the Exercise Period because of:

• $(a)$ being convicted of any breach of a criminal provision of the Corporations Act;
• $(b)$ being convicted of any other criminal office involving dishonesty; or
• $(c)$ committing a material breach of his employment or consultancy agreement (as the case may be) with the Company,

$\overline{7}$ . Manner of Exercise

$7.1$ Exercise Procedure

Each Option may be exercised by the Option Holder by delivering to the Company's registered office:

• $(a)$ the certificate for the Options being exercised;
• $(b)$ an Exercise Notice in respect of the Options being exercised; and
• $(c)$ payment to the Company of the amount being the Exercise Price multiplied by the number of Options being exercised.

$7.2$ Payment

Cheques or other methods of payment of the amount in clause 7.1(c) must comply with the directions of the Company and must first be received by the Company in cleared funds before any Shares will be issued pursuant to any exercise of Options.

8. Allotment and Issue of Shares on Exercise of Options

$8.1$ Allotment and Issue of Shares

The Company will within 2 Business Days of the Option Holder exercising Options in accordance with clause 7.1:

• $(a)$ Allot and issue to the Option Holder one Share for each Option exercised;
• $(b)$ Give the Option Holder written confirmation of the Shares allotted and issued to the Option Holder;
• $(c)$ Cancel the certificate for the Options exercised; and
• $(d)$ if any Options remain unexercised after the exercise that were evidenced by the cancelled certificate, deliver to the Option Holder a replacement certificate for the unexercised Options.

$8.2$ Quotation of Shares

No later than 7 days after Shares have been allotted and issued pursuant to clause 8.1, provided the Company's Shares are quoted on ASX at that time, the Company will apply at its own cost for official quotation on ASX of the Shares issued pursuant to this Deed.

8.3 Rights attaching to Shares

Shares allotted pursuant to clause 8.1 will rank equally with all the other fully paid ordinary shares of the Company then on issue.

Death or Bankruptcy of the Option Holder 8.4

Subject to prior production to the Company of such evidence as would be required to permit the legal personal representative or trustee in bankruptcy to become registered as shareholder in respect of Shares held by the Option Holder, if the Option Holder dies or is declared bankrupt, his legal personal representative or trustee in bankruptcy will stand in his place for the purposes of this Deed.

$9_l$ Reorganisations of Capital

$9.1$ Overriding Principle

In any reorganisation of the issued capital of the Company, including any re-organisation pursuant to clauses 9.2, 9.3, 9.4, 9.5 and 9.6:

• $(a)$ the number of Options on issue or the Exercise Price of those Options or both will be reconstructed in a manner:
• that is consistent with the Listing Rules; and $(i)$
• $(ii)$ which will not result in any:
  • reduction in the benefits conferred on the Option A. Holder; or
  • B. additional benefits being conferred on the Option Holder which are not conferred on shareholders of the Company.
• $(b)$ Nothing prevents the rounding of the number of Shares to be received on exercise of Options if the rounding is sanctioned by the meeting of shareholders of the Company approving the reconstruction of capital, but in all other respects, the terms of the Options will remain unchanged.

$9.2$ Consolidation

In a consolidation of capital, the number of Options on issue will be consolidated in the same ratio as the ordinary capital and the Exercise Price will be amended in inverse proportion to that ratio.

9.3 Sub-division

In a sub-division of capital of the Company, the number of Options on issue will be sub-divided in the same ratio as the ordinary capital of the Company and the Exercise Price will be amended in inverse proportion to that ratio.

$9.4$ Reduction of capital by return of capital

In a reduction of capital by the Company by return of capital, the number of Options will remain the same and the Exercise Price of each Option will be reduced by the same amount as the reduction of the value of each Share of the Company.

$9.5$ Reduction of capital by a cancellation of capital

In a reduction of capital by the Company by a cancellation of capital that is lost or not represented by available assets, the number of Options and Exercise Price of each Option will remain unaltered.

9.6 Pro rata cancellation of capital

In a pro rata cancellation of capital of the Company, the number of Options on issue will be reduced in the same ratio as the ordinary capital and the Exercise Price of each Option will be amended in inverse proportion to that ratio.

9.7 Pro Rata Issues

If there is a pro rata issue of securities by the Company to shareholders (except a bonus issue) the Exercise Price of any Option may be reduced according to the following formula:

$$
O2 = O - E \quad [P - (S + D)]
$$

N + 1

Where:

• $O^2$ = the new Exercise Price of the Option;
• $Q =$ the old Exercise Price of the Option;
• $E =$ the number of underlying securities into which 1 Option is exercisable:
• $P =$ the average market price per security (weighted by reference to volume) of the underlying securities during the 5 trading days ending on the day before the ex right date or the ex entitlements date;
• $S =$ the subscription price for a security under the pro rata issue;
• $D =$ dividend due but not yet paid on the existing underlying securities (except those to be issued under the pro rata issue);
• the number of securities with rights or entitlements that must $N =$ be held to receive a right to 1 new security.

$9.8$ Bonus Issues

If there is a bonus issue to the holders of Shares in the Company, the number of Shares over which the Option is exercisable may be increased by the number of Shares that the Option holder would have received if the Option had been exercised before the record date for the bonus issue.

$10.$ Participation in New Issues

$10.1$ Limited Right to Participate upon Exercise of Options

The Option Holder may participate in new issues of securities by the Company during the Exercise Period, but only on and to the extent of the prior exercise by the Option Holder of Options in accordance with the terms and conditions of this Deed and subject to any rounding of entitlements sanctioned by a meeting of the Company's shareholders. To

avoid any doubt, the Option Holder will be unable to participate during the Exercise Period in a new issue of securities by the Company by exercise of Options, to the extent that the Vesting Conditions for Options have not been satisfied.

$10.2$ Notice

The Option Holder will be given at least 14 days' notice before the record date for any new issue of securities by the Company.

$11.$ Listing Rules and Approvals

$11.1$ Changes in Capital

Despite anything in this Deed, to the extent that anything in clauses 9 or 10 is not permitted by Listing Rule 6, clauses 9 and 10 will be amended to the extent required to comply with Listing Rule 6.

$11.2$ Shareholder Approval

If approval of the Company's shareholders is required for the issue of any Shares upon the exercise of any Options, the Company must apply its best endeavours to procure that approval as soon as practicable.

$12.$ Changes to Terms of Options

The terms of the Options shall only be changed if all holders (whose votes are not to be disregarded) of Shares in the Company approve of such a change, provided that the terms of the Options will not be changed to reduce the Exercise Price, increase the number of Options or change any period for exercise of the Options.

$13.$ Warranties

$13.1$ The Company

To the maximum extent permitted by law, the Company gives no express or implied warranties in relation to the Options or the subject matter of this Deed.

$13.2$ Option Holder

If the Option Holder is not a Director, the Option Holder warrants and represents as a condition of this Deed that the Director at whose request the Option Holder has been nominated to hold the Options, has authorised and directed the Company to issue the Options under this Deed to the Option Holder in full and final performance of the Company's obligation to issue the Options to the Director.

$14.$ General

$14.1$ Notices

Any notice or other communication to a party under this document must be in writing and delivered personally, sent by prepaid mail, or sent by facsimile transmission to the recipient at the address or the facsimile number appearing in this clause or such other address or facsimile number as the recipient may have notified to the sender.

The Company

	Attention: The Company Secretary
	Elementos Limited
Address:	Level 1, Level 1, 349 Coronation Drive, Milton, Queensland 4064

Facsimile: 07 3229 3277

The Option Holder

Address: Per the Schedule

A notice is deemed to be received:

• $(a)$ if delivered personally, on the date of delivery;
• $(b)$ if sent by prepaid post, 5 Business Days after posting; and
• $(c)$ if sent by facsimile transmission, on receipt by the sender of a facsimile transmission report confirming receipt.

$14.2$ Counterparts

This document may be executed in any number of counterparts and all counterparts taken together will be deemed to be a single instrument.

$14.3$ Costs

Each party will pay its own costs relating to the preparation, negotiation and performance of this document.

14.4 Waiver

• A failure or delay in exercise, or partial exercise, of a right, power, $(a)$ authority, discretion or remedy arising from a breach of or default under this document, does not result in a waiver of that right, power, authority, discretion or remedy.
• $(b)$ A party is not entitled to rely on a delay in the exercise or nonexercise of a right, power, authority, discretion or remedy arising from a breach of this document or default under this document as constituting a waiver of that right, power, authority, discretion or remedy.

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$14.5$ Further Assurance

All parties must do all things reasonably necessary to give full effect to this document and the transactions contemplated by this document.

14.6 Severability

If any part of this document is, or becomes, legally invalid or unenforceable, the remainder of this document subsists and remains enforceable.

$14.7$ Entire Understanding

This document contains the entire agreement between the parties. All representations or agreements, whether oral or in writing made prior to the date of this document and relating to any matter dealt with in this document are merged in this document and do not have any effect from the date of this document.

$14.8$ Governing Law

• $(a)$ This document is governed by the law of Queensland.
• $(b)$ Each party irrevocably submits to the non-exclusive jurisdiction of the courts of Queensland and waives any objection to the venue of any legal process on the basis that the process has been brought in any inconvenient forum.

Assignment 14.9

A party may not assign its rights under this document without the consent of all other parties.

SCHEDULE 1

$\mathcal{C}$

Option Holder	Neil Francis Stuart or his nominee
Director to which Option holder is related (if a Option Holder is a company)	n/a
Address of Option Holder 55 Samarai Street, Moggill Qld 4070
Number of Options:	500,000	500,000
Vesting Condition	The Company's Share price quoted on ASX reaching 30 cents	The Company's Share price quoted on ASX reaching 35 cents
Vesting Date	The date the Vesting Condition is satisfied	The date the Vesting Condition is satisfied
Expiry Date	23 October 2015	23 October 2015
Exercise Price	25 cents	25 cents

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$\chi^{\prime}$

SCHEDULE 2 - OPTION EXERCISE NOTICE

To: Elementos Limited

Level 1 349 Coronation Drive Milton, Queensland 4064

[name of Option Holder], of [address of Option holder], $I_{\iota}$ hereby exercise my option to apply for [number] of fully paid ordinary shares in Elementos Limited (Company) pursuant to the terms of the Option Deed dated [date of deed] and I enclose \$ [amount] (being the number of Options exercised pursuant to this notice multiplied by 25 cents).

I request that you allot the shares to me and I agree to accept them subject to the Company's Constitution. If this application is signed by an attorney, the attorney hereby declares that he has no notice of revocation of the power under authority of which this application is signed.

[signature of Option Holder] Dated: [date]

EXECUTED as a Deed

Executed by

Elementos Limited

in accordance with section 127 of the Corporations Act

Secretary/Director

Name (please print)

$\overline{Director}$

$Me_{1}^{c}$ $Shuer$

Name (please print)

Signed Sealed and Delivered by Neil Francis Stuart

in the presence of:

Witness

PAUL CRAWFORD

Name of Witness (please print)

Idua

Name

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